A SureFire Way
PPF i.e. Public Provident Fund has since long been an extremely Popular and Loved instrument to invest money in order to save tax as per Indian Income Tax rules.
It has been considered to be very safe [ even Supreme court or for that matter President of India cannot touch it ] and rewarding [around 8% returns guaranteed ] investment.
Typically every indian who pays or avoids Income Tax, has at least one PPF account, operated for 14+ years and wherein everyone tries to deposit Rs. 70,000/= each year [ the maxm permissible ].
Let us now evaluate the facts.
Shear mathematics / arithmatics that is.
Rs. 70,000/ p..a. = Rs.5,834/= p.m. approx. for 14 years @ 8% would become Rs.17,68,137 .
That was 20th century India.
What are the avenues for the "Next Gen" of 21st century ?
ELSS by Mutual Funds.
What are the returns of a the better among them?
Birla Sun Life tax Relief "96 was launched about 14 years ago.
What were the returns over 14 years?
A whopping 46.73 % for one time investment and 32.56 % for SIP since Inception - 29-Mar-1996; i.e. over 13.years and 9 months.
19,03,863*5864= Rs. 1,27,51,731/-.
THAT IS STUPENDOUS 7.2 TIMES OF RETURNS BY PPF.
Let us understand "What is so good about Tax related Mutual Fund?"
PPF gave only a small fraction as compared to Mutual Fund viz. 0.1386585 is the fraction of Mutual Fund returns.
CONSIDERING THE RISK OF LOOSING SAY HALF THE AMOUNT IN MARKET CRASH, THE RETURNS WOULD STILL WORK OUT TO BE 3.6 TIMES OVER OF PPF.
THUS RESULTING IN A
Loss of Rs. 1,09,83,594 OUT OF INVESTMENT OF Rs. 9,80,000/=
Loss of 84.14 % of wealth that would have otherwise been created thru said ELSS of BSL MF.
WHAT A SUREFIRE WAY TO LOOSE OWN Rs. ONE CRORE.!!! when investing less than 10 Lakhs!
Even the worst of the Equity Linked Tax Saving Mutual Fund during the same period gave double of what PPF gave.
PPF = INVEST Rs 9.8 LAKHS
AND
LOOSE Rs. 1 CRORE AND 8 LAKHS.
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